09/20/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/092018.mp3
JUST LETTING YOU KNOW
Since the market’s never going down again – well, it will eventually go down – but right now we have Japan, United States, Europe, and China all doing their best to lift things.
Japan is printing money. They have zero percent interest rates. Europe is printing money. We are printing money. We have zero percent interest rates. And China is now doing all kinds of things.
And I got news for you. That helps markets. Because it helps markets when you see the economic numbers that I’ve been seeing, that have been continuously blah.
Transports
The Transports were down 141 today. What was the story. Norfolk Southern (NSC) warned. That stock was shellacked to the turn of 6.60…major ugly yuck on almost 8x average volume. And if you look at the weekly on Norfolk Southern, that is real bad. Of course, that influenced CSX, Union Pacific (which has been the strongest name and which has now dropped below the 50-day moving average), and Kansas City Southern (CSU).
The past four months, the Transports have continued underperform badly on the back of the rails, but also the airlines because of rising oil prices.
It bears repeating. There is something called the Dow Theory, where if the Transports and not acting well and the Dow is, the Dow is coming down and the market’s coming down. I don’t not agree with this theory. I don’t not believe it’s 100%.
What I would rather do is say, just don’t own the Transports. And if the market decides to come in and decides to top, I’ll deal with that when it shows.
And on a day like today when the Transports were down almost 150, the market was down during the day and finished near flat-line, even though the internals were not very good.
The fact of the matter is, the banks are acting fine. The commodities, while they pulled back the past three days, looks like a normal pullback. And the Fed, ECB and Japan are printing money. And China is spending this, that and the other thing. That matters.
We’re not dealing with small amounts. We’re dealing with monstrous amounts that manipulate markets. Until the markets stop reacting to them, you’re better off to stay with them. If just by reading the economic news and about the deficits and about what’s happening Europe and China – you’d think the Dow was at 9,000.
And when I get emails from people that are doubting this market, I just answer back, “The market’s disagreeing with you.”
JC Penny (JCP)
I don’t think I’ve been to a JC Penny store since I was 15. And gotta tell you, if you’re shareholder, I’d be so PO’d right now. In case you don’t know, JC Penny hired away the head of retail for the Apple stores. He is the CEO of JC Penny and he was formerly the Senior VP of Retail Operations for Apple. Basically, he came in and dropped all the sales. And the whole retail industry laughed at them. The stock originally had a bump when they announced that he had joined JC Penny, but you can’t not have sales.
People want to feel they getting a bargain. Anyway, the stock has dropped from 43 to 19.
Of course, the past two quarters, they lost .25 a share on a drop of 20% in revenue. And on this last quarter ending July 31st, there was a loss of .37 on a 23% drop.
But recently, they came out with this new concept of having different kinds of shops in the JC Penny stores. There are those who think he’s nuts and those who think this is going to change the face of retail and he’s going to be right.
Well, I’ve got news for you, I don’t have a clue. The question is, why do the consumers need to go into JC Penny, when they go into a mall anyhow?
Well that’s not my point.
Yesterday, they had some conference with analysts, going through all these changes and this, that and the other thing. And the stock rallied from 29 to 32.5. After they’re done going through all that and the stock is rallying…oh by the way business stinks. And the stock closed at 29. So anybody that bought yesterday is getting kicked in the rear end – and it drops another 3.25 down to 25.83 on a worsening outlook.
So here’s my memo and message to anyone that works at JC Penny. You need to speak to your CEO. If you’re going to hold a big presentation and you have divergent news, do it before the open or after the close. Why? Because you screwed some investors.
You get my point? This is a guy who is not handling Wall Street very well. And he better start handling Wall Street. It counts.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.